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Thursday, September 20, 2012

Facebook Inc (NASDAQ:FB) Found Another Way To Boost Revenue, Shares Near Session Highs

Facebook Inc(NASDAQ:FB)
reported that it will begin charging businesses to run Offers on its social
networking site. This will turn a previously free site into a prospective
revenue generator. This comes at a time when Wall Street is demanding new
sources of profit and growth from the firm.

Facebook has launched
Facebook Offers this year that allows retailers and other local merchants to
send deals to their Facebook fans. Users can claim the offers from their News
Feeds and redeem the vouchers at shops to avail discounts.

The service started off
as a free service but in the upcoming weeks Facebook will need merchants to pay
a minimum $5 on related ads to promote Facebook Offer to a targeted set of
customers and their friends.

Ever since Facebook
went public in the month of May, the firm has been under a lot of pressure from
Wall Street to show how it can turn the giant social network into a
money-maker. Facebook stocks have lost about 40% of its value since the IPO.

The commercial
potential of Facebook, called the f-commerce is yet to materialize, partially
because of retailers have been able to enjoy a host of freebies on the social
network to lure customers.

Connecting Facebook
Offers to a paid ad service shows that the firm is working on changing this.

Director of product
management for Facebook’s advertising and Pages businesses, Gokul Rajaram said
that the firm thinks this aligns incentives properly and the best outcome on
Facebook Offers will come from organic distribution along with paid distribution.

In last few days,
Facebook Offers haven’t been relevant to all kinds of users, partly because
some users found deals in their feeds from service providers and merchants
based at a faraway place. He mentioned that the requirement to pay for related
adverts will help merchants to focus on who and where they want the offer to
reach.

Facebook is also
working on expanding Offers to businesses that operate only online. The service
was only accessible to merchants with physical locations.

Shares of FB were
recently trading at $23.13, down 0.70% after hitting session low of $22.67. The
stock has risen about 22% in the past one week amid various
developments.